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The Buffett Rule

By Andrew Rosenthal April 10, 2012 1:26 pmApril 10, 2012 1:26 pm

Few things capture the difference in values between President Obama and his Republican opponents quite as neatly as their positions on the Warren Buffet-inspired Buffett Rule, which would require Americans making over $1 million a year to pay at least 30 percent of their income in taxes.

As Mr. Obama sees it, the government has a role to play in encouraging (something that at least resembles) an equal opportunity society, and raising tax rates on millionaires is one of many possible mechanisms for promoting fairness. He’s scheduled to discuss the Buffett Rule—technically the Paying a Fair Share Act—later today at Florida Atlantic University, and according to a copy of his prepared remarks sent around by the White House, he’s going long on morality.

Right now, the share of our national income flowing to the top 1% has climbed to levels last seen in the 1920s. And yet those same people are also paying taxes at one of the lowest rates in 50 years. You might have heard this, but Warren Buffett is paying a lower tax rate than his secretary.

That’s wrong. It isn’t fair. And it’s time for us to choose which direction we want to go in as a country. Do we want to keep giving tax breaks to the wealthiest Americans like me, or Warren Buffett, or Bill Gates – people who don’t need them and never asked for them? Or do we want to keep investing in things that will grow our economy and keep us secure? That’s the choice.

Many Republicans are uncomfortable with government-sponsored fairness, which they believe can edge into the territory of social engineering, and perceive the rule as an anti-competitive gimmick. That’s what they want us to think, anyway—if you ask me, they’re just beholden to thoroughly debunked trickle-down nostrums that amount to giving advantages to people who already have plenty of them.

Ahead of the Florida address, Mitt Romney’s campaign accused the president of waging “class warfare” – a term Republicans use when Democrats appeal to the middle class. When Republicans appeal to really rich people, they call it job creation.

The Republicans complain that the Buffet Rule will not make a big dent in the federal budget deficit. They’re right. It would mean an extra $47 billion or so for the federal treasury over 10 years and that’s not real money these days. The real money would come from letting the Bush tax cuts expire at the end of the year; that’s worth about $1 trillion over a decade. But the Republicans are determined not to let that happen.

Neither Mr. Obama nor Mr. Buffett has ever said the millionaires’ rate is about deficit reduction. It is about making the tax code truly progressive. When Mr. Buffett pays a smaller share of his income to the government than his secretary, we are not just rewarding Mr. Buffett, we are punishing the secretary.